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It’s the “Knowledge Economy”, Stupid
The days of people staying with one employer for the whole of their career are long gone.
Today’s employees seek fresh challenges and new roles to help to fulfil their career aspirations. According to recent US research, the median number of years that workers have been with their current employer is just 4.6 years and many predict that this figure still has further to fall as ambitious employees seek ambitious employers to help them achieve their career objectives.
The transient nature of today’s workplace represents a problem not just for human resources but for businesses as a whole. Recent UK research suggests that – accounting for the logistical cost of recruiting and absorbing a new member of staff – the average cost of replacing an employee is £30,614. This figure is illustrative of the knowledge economy in practice – demonstrating the importance of both the skills and experience which a new employee brings with them as well as those which they must acquire in order to get “up to speed” in their new role.
With that in mind alone, reducing staff turnover is clearly desirable. The answer for many companies lies in embedding continuous learning and staff training and development. The reason for this is simple: by investing in the knowledge economy you are showing staff you value their personal aspirations, removing the need for them to look elsewhere to realise their career ambitions and helping you to achieve your own business aims.
One example of this ethos in practice can be found in US financial services company BB&T’s four phase Leadership Development Program, the results of which make impressive reading. The company’s five year retention rate is 80%, outperforming the industry average by 43% and monthly performance figures for graduates of the program are up to 54% higher than direct hire counterparts.
Similarly impressive results following investment in the knowledge economy can be found within pharmaceutical company Genentech, a member of the Roche Group. Its CareerLab program includes support such as learning opportunities in the form of webinar and classroom sessions covering a wide range of topics that are accessible to all employees, plus mentoring and access to career consultants. The program has helped Genentech maintain an employee turnover rate of 6.2% (as compared to the industry average of 11%) and 42% of job openings are sourced from internal candidates, minimising recruitment costs. Furthermore, a two year impact study found that 92% of respondents felt they were more likely to remain with Genentech/Roche and 82% were more engaged in their work.
The value of investment in people management is borne out in research commisioned by Investors in People.
The report, "The impact of investing in people", estimates that if all UK businesses followed the best performing businesses’ approach to improved people management, the UK economy could make efficiency gains of £77bn.
Examples such as those from BB&T and Genentech and the statistics from our research clearly demonstrate the value of the knowledge economy and show how embedding continuous learning in the culture of your organisation has enormous pay offs.
The question is: how does your organisation measure up? Is continuous learning a part of your business culture? Do your most ambitious recruits stay with the company, progress through the ranks, support your objectives and deliver results? In short, does your company leverage the benefits of the knowledge economy?
Find out more:
- Download "The impact of investing in people" report.